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Travel Insurance and COVID-19 Coronavirus

COVID-19, also known as coronavirus, emerged as a threat in the city of Wuhan, in China and in a matter of a few weeks it has developed into a pandemic threatening people all across the globe. People, businesses, institutions as well as governments have been destabilized as well as drastically affected by the outbreak.

Spreading through person-to-person contact or through respiratory droplets produced when an infected person coughs or sneezes, the illness presents flu-like symptoms including fever, cough, and shortness of breath.

Lack of any vaccination or medication for the virus and its ability to travel across the globe has caused a major lockdown in several cities all over the world. People who had plans of traveling, whether for personal or business purposes had to postpone or even completely cancel their plans due to the travel bans instigated by multiple governments in several countries.

The virus outbreak has caused a lot of stir in the travel insurance business and has resulted in mass confusion among policyholders on coverages and whether their insurance will cover the canceled trip.The majority of insurers have stated that the standard policies under travel insurance do not cover epidemics and unless a policyholder has “cancel for any reason” coverage, he/she is out of luck.

Most standard travel insurance policies cover cancellations that stem from a medical emergency but given the magnitude of COVID-19 and it being classified as a global epidemic, it is likely to be excluded from coverage. The rapid spread of coronavirus has hit the travel industry pretty hard, as cancellations and travel restrictions have caused major losses to business operations.

Amongst all this confusion, travel insurers like Allianz Travel Insurance has loosened some of the restrictions when it comes to filing a claim in light of COVID-19. Its policies provide some relief to policyholders who are afflicted with the virus and whose policies include ‘Emergency Medical Care Benefits’ as well as ‘Trip Cancellation or Trip Interruption Benefits’

Other insurance companies are complying with travel health notice parameters set up by various countries. Given the magnitude of the virus, countries all over the globe have been classified into three warning levels. Level 1, Level 2 and Level 3.

According to the CDC, all countries with a Level 3 warning showcase potential high-risk scenarios and travel insurance policies for visitors would not cover emergencies related to coronavirus. With countries having a Level 1 or Level 2 warning, trip cancellations would cover expenses only if policyholders have bought trip cancellation benefits.

In general, due to COVID-19 being declared an international epidemic, the best way to protect one’s trip is to purchase “cancel for any reason” if the insurance company provides it as an additional benefit in the policy. However, if one does use “cancel for any reason” full compensation is still a dream and one should likely expect to get only partial compensation.